JetBlue’s profit warning fuels concern over US travel demand
JetBlue Airways slashed its full-year profit forecast over signs of a slowdown in domestic demand, becoming the latest carrier to warn of a shift toward international routes and renewing questions about the durability of a post-pandemic surge in US travel. The company also said Tuesday that it would earn less this quarter than analysts expected, echoing comments from Alaska Air Group Inc. last week that waning demand and fares would hurt near-term results. “The guidance is extremely disappointing,” Helane Becker, a TD Cowen analyst, said in a note about JetBlue. “The current revenue environment where domestic fares are trending lower is driving the big reduction in earnings expectations.” The shift has been unexpectedly rapid for US airlines, after industry leaders for months talked of a boom in demand that was expected to persist even through an uncertain economy. As more countries have relaxed pandemic-era policies, travelers have increasingly opted for overseas flights at the expense of domestic routes. Along with Alaska’s warning, Southwest Airlines Co., the largest carrier focused predominantly on US flights, spooked investors last week after it didn’t say whether it expected an early-summer travel surge to carry into the second half of the year. The carrier does offer some international flights, including routes to London and Paris. While growth there is a positive for JetBlue, “this segment appears unlikely to be large enough to offset the carrier’s domestic challenges,” Stephen Trent, a Citi analyst, said in a report. Adjusted full-year earnings will be 5 cents to 40 cents a share, compared to the carrier’s earlier outlook for 70 cents to $1, JetBlue said Tuesday. Revenue for 2023 will increase as much as 9%, compared with its earlier outlook for a jump in the high single digits to low double digits on a percentage basis. The company expects the wind-down of the Northeast Alliance with American Airlines Group Inc. in the Boston and New York City areas, along with weather and air-traffic control delays in the northeast, to each reduce 2023 profits by 20 to 25 cents a share, with the shift in travel demand to outside of the US accounting for another 15 to 20 cents.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-08-02/unaligned/jetblue2019s-profit-warning-fuels-concern-over-us-travel-demand
https://portal.staralliance.com/cms/logo.png
JetBlue’s profit warning fuels concern over US travel demand
JetBlue Airways slashed its full-year profit forecast over signs of a slowdown in domestic demand, becoming the latest carrier to warn of a shift toward international routes and renewing questions about the durability of a post-pandemic surge in US travel. The company also said Tuesday that it would earn less this quarter than analysts expected, echoing comments from Alaska Air Group Inc. last week that waning demand and fares would hurt near-term results. “The guidance is extremely disappointing,” Helane Becker, a TD Cowen analyst, said in a note about JetBlue. “The current revenue environment where domestic fares are trending lower is driving the big reduction in earnings expectations.” The shift has been unexpectedly rapid for US airlines, after industry leaders for months talked of a boom in demand that was expected to persist even through an uncertain economy. As more countries have relaxed pandemic-era policies, travelers have increasingly opted for overseas flights at the expense of domestic routes. Along with Alaska’s warning, Southwest Airlines Co., the largest carrier focused predominantly on US flights, spooked investors last week after it didn’t say whether it expected an early-summer travel surge to carry into the second half of the year. The carrier does offer some international flights, including routes to London and Paris. While growth there is a positive for JetBlue, “this segment appears unlikely to be large enough to offset the carrier’s domestic challenges,” Stephen Trent, a Citi analyst, said in a report. Adjusted full-year earnings will be 5 cents to 40 cents a share, compared to the carrier’s earlier outlook for 70 cents to $1, JetBlue said Tuesday. Revenue for 2023 will increase as much as 9%, compared with its earlier outlook for a jump in the high single digits to low double digits on a percentage basis. The company expects the wind-down of the Northeast Alliance with American Airlines Group Inc. in the Boston and New York City areas, along with weather and air-traffic control delays in the northeast, to each reduce 2023 profits by 20 to 25 cents a share, with the shift in travel demand to outside of the US accounting for another 15 to 20 cents.<br/>
